Hong Kong stocks closed mixed.
The Hang Seng Index lost 0.1%. The Hang Seng Tech Index rose 0.3%.
In terms of star stocks, Kingsoft Cloud rose 31%; SMIC rose 10%; Alibaba rose 6.5%; Tencent rose 1%; Li Auto fell 6%; Meituan fell 4%; JD.com fell 3%; NIO fell 2%.
Chinese equities listed in Hong Kong outperformed their Asian peers as gains in tech heavyweights countered the negative impact of a new US tariff on China.
The Hang Seng Tech Index rose 0.3% with a rally in Alibaba Group Holding Ltd. and Semiconductor Manufacturing International Corp. providing support. The moves came on the heels of a resumption in trade in Hong Kong following the Lunar New Year holiday, while markets on the mainland remain shut.
Chinese startup DeepSeek’s low-cost AI model has highlighted Beijing’s strength in the industry and spurred wagers that the advancements will help the nation close the gap with the US. Investors are also looking to an annual legislative meeting in March for further stimulus to revive a market that has lost around half the gains it posted following a policy blitz unveiled in September.
“China tech stocks benefit sentiment-wise from what we learned about DeepSeek, in the sense it showed that China tech companies might not lag in AI too much,” said Xin-Yao Ng, an investment director at abrdn Plc in Singapore. “Besides DeepSeek, there’s actually been a series of model releases in China over recent weeks that all claims to match overseas tech, like Bytedance’s Doubao, Alibaba’s Qwen, another startup Moonshot.”
Alibaba’s shares jumped after the company said its new AI model scored better than Meta Platforms’ Llama and DeepSeek’s V3 in various tests.
Trump imposed tariffs of 25% on Canada and Mexico and 10% on China on Saturday, with the levies set to come into effect Tuesday. While Canada and Mexico have vowed to hit back, China’s Commerce Ministry said it would initiate “corresponding countermeasures” without elaborating, and pledged to file a complaint at the World Trade Organization.
The latest tariff announcement from Washington also weighed on other Chinese assets, with the offshore yuan sliding as much as 0.7% on Monday to approach a record low versus the dollar.
Beijing is preparing an opening bid to try to head off greater tariff increases and technology restrictions from the Trump administration, according to a report in the Wall Street Journal.
Stimulus Push
The additional levy will worsen the drag on growth, with a private survey released Monday showing that China’s manufacturing activity unexpectedly declined for a second straight month in January. Taken together, all this may reinforce the pressure for authorities to do more to stimulate growth.
“If the additional tariffs are indeed imposed on Tuesday as threatened, we think it is likely that Beijing responds with cuts to reserve requirement ratio and onshore benchmark rates and modest devaluation of the yuan,” said Homin Lee, a Singapore-based senior macro strategist at Lombard Odier.
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